Just Bought Our First Home and Now We're Landlords until June 2019 - Any Advice?

1mmy1mmy on 20/09/2018 - 07:44

Hello

We're in our early 30s and following all that helpful advice from the politicians we've got ourselves good jobs and we have saved a deposit for a house. Unfortunately we weren't able to go back in time and have rich families and a bank of mum and dad to help us, but I guess we can't follow every instruction from Canberra!

So we have exchanged contracts on a house (building inspection and finance all good) and I am wondering if there are any experts out there who could advise me on these three areas:

1) What do you wish you knew as a first homebuyer? I've heard that we should get building insurance straight away (even before settlement)? Are there any other important things to think about and do?

2) Now we are landlords - what do landlords need to know and do? We would prefer that the tenants were not on a fixed term lease so we could give notice to vacate but they are, so they have the right to stay until next June. I have been renting since I was 18 and I don't want to be a bad landlord (oh man have I seen some absolute shockers over the years).

3) Are there any tax deductibles or government schemes I should investigate? I have seen the Victorian Government's new solar scheme but we don't live in the house yet so we aren't eligible for now.

Many thanks to the OzBargain brains trust…

Home & Garden

Comments

  • brownbag on 20/09/2018 - 08:01
    +11

    A few ideas:
    1. Yes, you need to get building insurance to protect your interest in the property.
    2. If you're only landlords until June next year, it's hard to say if it is worth getting a depreciation schedule and trying to depreciate items, or just depreciating items yourself without paying for a schedule. But it could be worthwhile. Then again, this is only possible for relatively new houses or new items in the house.
    3. I'd consider looking at any maintenance that needs to be done to the house and doing it while you're renting the property out. There may be tax advantages to doing that as it would be considered a cost of your rental and therefore tax deductible and will offset your rental income. Anything bigger like renovation of a kitchen is a capital expense so there's not as much benefit in doing that now (you only get depreciation until you move in and it is a hassle for you and the tenant).
    4. As for the new solar scheme there is some silver lining in the cloud - if you wait until July next year, and the Labor government is still in office, you'll get a zero interest loan on the solar system.

    Cheers.

    • 1mmy1mmy on 20/09/2018 - 08:30
      +2

      Thank you - some excellent advice here. I'm looking into building insurance now.

      There is a ridiculous stove (https://imgur.com/KaDtMC9) that needs to go… I think we can get a second hand one off gumtree when we move in.

      I will take that advice and get a few things fixed from the building report (clean gutters, improve drainage from the hot water system).

      That's a great policy imo. I don't think we'll be eligible due to our income then but I hope it helps lots of other people to get solar power.

      Cheers!

      • lupiter on 20/09/2018 - 09:59
        +11

        Is that the actual stove? Because that is amazing and I love it. (Not practical but pretty)

        • 1mmy1mmy on 20/09/2018 - 11:54
          +1

          That is the actual stove. Very, um… quaint! If only we had a shack somewhere in the bush we could move it to…

        • altomic on 20/09/2018 - 13:26

          @1mmy1mmy: my grandmother had one of those stoves. came with the house when she bought it new in 1934. she was still using it until 2001.

        • elgrande on 21/09/2018 - 16:24
          +3

          @1mmy1mmy:

          Who said you couldnt go back in time!

        • 1mmy1mmy on 21/09/2018 - 16:30

          @altomic: built to last!!!

      • angusngon9 on 20/09/2018 - 10:09
        +7

        LOL that stove looks so cute

      • CheapSticks on 20/09/2018 - 10:20
        +4

        have you spoken to the tenants - they might be ok to vacate early.

        • Quantumcat on 20/09/2018 - 21:18
          +4

          Second this, when I bought my house in august last year the tenants had a lease until November. We spoke to them and told them we wanted to move in and they were free to move out as early as they wanted and there would be no new lease for them. They gave us notice early September and we were all moved in by the end of September! I think they appreciated that they had all the time they wanted to find their perfect next place (3 months) and didn't have to be temporarily homeless or paying rent on two places.

        • paulinspace on 21/09/2018 - 09:24
          +1

          This is a great piece of advice. Moving sucks and is made worse by the pressure of deadlines and the need to pay double rent to ensure you get the next place. So let them have exemption from break costs and say a 3 week notice period and tell them they have until June to find a new place.

        • zappy32 on 21/09/2018 - 14:16
          +1

          I've also had friends that were offered two weeks free rent if they wanted to move out well before their contract was up and they took it willingly. If you want to move in you could always talk to them and if they need some persuading as they know they'll be given notice when the lease is up they may go for it. Also, if they they can time it in early December there maybe some cheaper rentals available as less people are looking to move in December.

        • Conka on 21/09/2018 - 16:04
          +1

          @zappy32: This. For sure.

          We've never had issues buying houses and offering some free rent served both parties well - i.e. they don't pay the last couple of weeks. (once they've given you an end date) as an incentive worked out well for both parties.

          Have also heard of landlords helping to pay for removalists as an incentive.

          They can only say "no". You've nothing to lose.

        • nikey2k27 on 22/09/2018 - 21:18

          I did this on my new place tenants were total cool 3months to move out.

      • try2bhelpful on 20/09/2018 - 16:17
        +4

        See if you can find a corner of the garage to keep it in for a little while. Something like that is a good conversation piece after you have renovated the house.

        Preferably do any "repairs" to the place before you move in as it is less intrusive. We had a solid brick house but we got the floor stumps redone before we moved in. The main thing we learnt from our first place was to sit back and live in the house before you do any serious renovating. It is amazing how your views will change once you live there for a while and see how you "flow" through the house. In our first place we were going to tear down the old garage and build a new one. The thing was still standing when we sold it but the bathroom was renovated to bring the toilet inside.

        • 1mmy1mmy on 20/09/2018 - 16:29

          Thank you - that is solid advice. (We won't have any reno money anyway!!)

      • parisienne on 21/09/2018 - 08:46
        +1

        GET OUT.That stove (seriously,is that it ? ),has to be the most gorgeous thing since the pink Smeg fridge i saw once (also impractical,as it too is super tiny inside).

        • 1mmy1mmy on 21/09/2018 - 16:33

          Yep - that's it! Maybe the small fridge and small oven would help us with our portion sizes…

      • SlickMick on 21/09/2018 - 13:33

        I think you'll find the depreciation schedule is useless now - unless the home is brand new. I heard that the ATO no longer allows depreciation on anything not new. (I'm a bit behind on tax returns so haven't checked for sure.) ATO is trying to make property investment unattractive.

      • Conka on 21/09/2018 - 16:04
        +1

        If the stove is in good condition, you might be able to sell it to a collector. Even if it's $50 …

      • mrhugo on 21/09/2018 - 18:08
        +2

        Dude! That's an Early Kooka stove…that thing worth good money…and I'm not joking.

      • cardboardbox on 21/09/2018 - 20:36
        +1

        😍😍😍😍😍I want your stove !! It’s gorgeous!

      • Fier2 on 22/09/2018 - 17:06

        Oh my god that stove look amazing! Don t throw it in the bin but look for people who are antics hunter! You could sell it for more than you think!

    • the nathan on 21/09/2018 - 17:53
      +4
      1. Agree. It's a must.
      2. Laws changed from 1/7/18 (or maybe it was 1/7/17…). I'd suggest a depreciation schedule would be a waste of money. Essentially you can only depreciate assets that are new when you purchase the property and the special building write off. Though it may depend on the age of the property. I'd probably steer away from it though.
        2a. Everything is negotiable. E.g. my wife and I wrote in the contract that settlement was 30 days or 2 days after the property was vacated, which ever is later. I appreciate that it might be too late to include this in the contract though.
      3. Be carefully of the repairs and claiming them. There is a thing called "initial repairs" which effectively means they just get added to the cost of the property for CGT purposes meaning there's no deduction as such. You'd have to make an argument that the damage was done whilst you owned the property. The initial repairs rule would cover any repairs to things that were damage prepurchase. I.e. you're bringing the property back up to scratch.

      Nathan - tax accountant

      • 1mmy1mmy on 22/09/2018 - 04:04

        Wow I had no idea about initial repairs. Many thanks!

        Too late for us, but that was an excellent idea for a clause!!

    • locknuts on 22/09/2018 - 16:25

      Keep the first rental statement and ensure you get a summary at the end of the rental period. Also be sure to claim water, rates and any other expenses for the period until you move in. Visiting the home should be able to be claimed for that period but check with your accountant. Interest on the loan for the rental period should also be able to be claimed. Milk the landlord period for all it's worth!

      • the nathan on 24/09/2018 - 13:44

        Travel for residential rental properties can no longer be claimed. 2017 was the last year of residential travel deductions.

        • locknuts on 24/09/2018 - 17:24

          Good to know. Thanks.

  • hangdog on 20/09/2018 - 08:05
    +3

    Get landlord insurance instead of building insurance?

    • brownbag on 20/09/2018 - 08:08
      +4

      From what I remember (over 10 years ago) landlord insurance doesn't cover building insurance. If you feel that you need landlord insurance then you need to get both (and in fact your bank will require you to have building insurance).

      As for the need for landlord insurance, it's a great idea - I had it when I had an investment property and never regretted it - then again the houses were in a dodgy area and we had some shocking tenants. I think landlords insurance is essential in some cases and not in others - depends on the cost and the area you live in.

      • 1mmy1mmy on 20/09/2018 - 08:36

        An interesting point… the area is Richmond in Victoria and the tenants are a young professional couple who've been in the house for a few years. From their furnishings, they seem to have their life in order. I think they are paying too much rent for the property (or more than I would pay that's for sure).

        • try2bhelpful on 20/09/2018 - 16:49

          Richmond, not bad at all. The real problem will be stopping yourself going out all the time.

        • 1mmy1mmy on 20/09/2018 - 18:08

          @try2bhelpful: Hahaha yep, a few more years of living frugally and then we can make the most of the nightlife:D

        • paulinspace on 21/09/2018 - 09:26
          +2

          first home buying in richmond?! holly toledo.

        • MrBear on 21/09/2018 - 09:41
          +2

          And you still need contents insurance, because not everything is considered "building".

          So you need building, contents AND landlord insurance.

        • Qkumber on 21/09/2018 - 09:47

          @MrBear: yes this, 3 types of insurance is required

        • SlickMick on 21/09/2018 - 13:24
          +3

          @Qkumber:
          But it's generally all included in the insurer's "landlord" product. If you ask for landlord insurance and they ask the value of the house and value of YOUR contents, you know you've got the right product.

    • Piranha2004 on 20/09/2018 - 10:30
      +4

      As someone said you ideally need both. One for the building and one for the landlords. Landlords insurance wont protect you from storm water and building insurance wont cover you for damage done by landlords.

      • SlickMick on 21/09/2018 - 13:25

        I've never seen a landlord insurance product that didn't cover the building.

        • Piranha2004 on 21/09/2018 - 13:29

          The building cover on landlord's insurance is only for damage done by tenants. If a tree falls on your house then you are sweet out of luck.

          Examples: https://www.terrischeer.com.au/landlord-insurance/
          https://www.racv.com.au/in-your-home/insurance/landlord-insu…

          Building cover is for tenant damage only.

        • SlickMick on 21/09/2018 - 13:41

          @Piranha2004:
          Yes, that terri sheer policy is pure landlord insurance.
          I think the RACV one includes full building cover - your link mentions fire and storm without looking into PDS.

          Suncorp: includes flood, storm, riot, lightning, fire, theft, explosion, escape of liquid, earthquake…
          https://www.suncorp.com.au/insurance/home/landlord.html

        • Piranha2004 on 21/09/2018 - 13:49

          @SlickMick:

          No the RACV one doesnt cover building (I own both RACV and Terri Scheer) as Ive had to take out separate building/contents insurance for my IP. The Suncorp one is the only "all in one" type of LL Insurance Ive seen. It's certainly not the norm as you claimed.

        • SlickMick on 21/09/2018 - 13:55

          @Piranha2004:

          I'm just going by my experience. I've shopped around for landlord insurance dozens of times and never came across one that didn't include the building. I was aware of Terri Sheer because I've used them for apartment landlord insurance - though my recollection was that it did cover everything.

          I'm not convinced that RACV doesn't cover the building. Why would it cover it for fire and storm and not everything else? Would have to be dodgy insurance - you'd need to by double-insured on those items if you bought extra insurance.

          I stand by my claim - landlord insurance normally includes building insurance.

    • [Deactivated] on 23/09/2018 - 15:17

      they are two seperate products that cover different things. If you have a morgate it would be in the contract that you have to have building insurance.

      You would sort out the building insurance before settlement but you wouldn't have the policy commence until settlement, it would be a waste of money insuring it before settlement, if it burnt down or something then the sale would be cancelled and your deposit refunded.

  • EightImmortals on 20/09/2018 - 08:07
    +1

    1) You want a good LANDLORDS policy, not just a building policy. Your liability starts from when the contract goes unconditional.
    2) Until you take possession (as in move in to the home) you can claim you interest payments and all (or a portion of) repairs and maintenance. Keep all the receipts and records relating to the sale and the 9 months rental period for your accountant next July.

    • 1mmy1mmy on 20/09/2018 - 08:34

      Step one, collect receipts… Step two, finally get an accountant.

      Excellent advice - I am going to do some minor repairs and consider which insurance is best - thank you.

      • EightImmortals on 20/09/2018 - 08:50
        +1

        No worries, make sure it covers building insurance and damage caused by tenants and fixtures and fittings, and possibly loss of rent if that's a concern though by the sounds of it if the tenants do a runner you'll move straight in anyway?

        • 1mmy1mmy on 20/09/2018 - 10:41

          I didn't consider the damage that may be caused by the tenants because they seem to look after the place - but I guess that's what insurance is for… just in case. Thank you!

        • EightImmortals on 20/09/2018 - 10:53
          +1

          @1mmy1mmy: Yeah if they are long termers and have looked after the place that part might not be an issue. I always used to automatically get it though as you never know. And the insurance is a deductible as well. :)

  • payton on 20/09/2018 - 08:16
    +1

    Comment on item 2)

    I have been renting since I was 18 and I don't want to be a bad landlord (oh man have I seen some absolute shockers over the years).

    Its not that hard to be a good landlord IMO

    Fix essential items in prompt manner, give tenants contact numbers of your preferred electrician, plumber, and handyman if there's an emergency and you/agent can't be contacted, tell tenants to keep in regular contact via email and SMS. Give agents specific instructions when vetting clients/tenants so you only get tenants with personality matching your lifestyle (eg no slobs or yobbos), get an agent that will draft you a strict Tenancy Agreement

    • 1mmy1mmy on 20/09/2018 - 08:37

      Thank you - that is helpful. I will do some research on preferred tradespeople in preparation. Proactive, not reactive.

      My instruction to the agent will be, if they want to move out early, don't try to charge them… let them go!

      Cheers!

  • bohn on 20/09/2018 - 08:42
    +2

    Just an FYI - since you are not moving in straight away you will not be able to be fully exempt from capital gains tax on the house. It will always be prorated between days leased/days lived in (including the 6 year absence rule, which will only be available to you once you have lived in the ppty). The ATO does not accept that a lease in place upon purchase of a property to be a reason for not moving into the property 'as soon as practicable'.

    • z0s0 on 20/09/2018 - 08:51
      +9

      No need to worry about that.. there won't be any capital gains :-)

      • bohn on 20/09/2018 - 09:25
        +1

        hah :) nice one.

      • 1mmy1mmy on 20/09/2018 - 10:36
        +1

        Oh god(s)… yes… don't get me started on that. It was a hard decision - buy out West (where I work) or buy where we actually want to live suffer the consequences of the declining housing market. Having made this decision I'm not sure if I'm allowed on Ozbargain anymore…

    • 1mmy1mmy on 20/09/2018 - 10:37

      I have no idea what you're saying but I will look into this - thank you!!

      • kiitos on 21/09/2018 - 08:18

        He's saying the 9 months or so that the tenants will be renting it for will expose you to capital gains tax when you eventually sell, because the house will be an investment as you won't have lived in it first to make it your principal place of residence, which allows you to later rent it out for limited periods free of capital gains tax.

      • Smulder on 21/09/2018 - 15:41

        Make sure you do look into it. You are about to make a costly mistake!!

      • termite on 21/09/2018 - 17:22
        +2

        In that case, it makes sense to pay your tenant to move out as soon as possible so you won't be exposed to any capital gains tax.
        keeping them for 9 months will actually cost you a lot more, assuming market hasn't crashed

    • Thenarrator on 22/09/2018 - 08:28

      this is interesting, may i clarify?

      i buy house, move in 6 months, rent out 5yrs, move in 6 months, rent out 5yrs, sell house. Will i be exempt from capital gain for whole 11yrs since 6yr rule resets?

      I buy house, rent out for 1y, move in for 1y, rent out for 5y, sell house. will i pay cgt for 6yrs of renting out or only first yr of renting out?

  • Typical16-bitEnjoyer on 20/09/2018 - 08:51
    +2

    Question 1 should be directed to your conveyancer/solicitor. You are paying them good money, get your moneys worth.

    Question 3 should be directed to an accountant/financial planner.

    • 1mmy1mmy on 20/09/2018 - 10:32

      1) I didn't know I could ask them - I'll email now!! Excellent advice.

      3) Yes - we are discussing getting one.

      Cheers!

      • WhyAmICommenting on 21/09/2018 - 12:50
        +1

        Also, while this is an investment property you should not make any additional loan payments.

        You can have an offset account but talk to the financial planner before you pay off any extra on the loan as I believe there could be tax consequences. Just a heads up.

        • 1mmy1mmy on 21/09/2018 - 16:40

          Thank you I will look into that - i haven't heard anything about that until now.

  • Peter Enis on 20/09/2018 - 09:21
    +3

    Have been through this myself (bought a unit that I wanted to move into but the tenants still had 6 months on the lease).
    If you really want to move in sooner I would get the agent to indicate to the current tenants your intention to vacate them at the end of the lease. Suggest that if they find something to move into sooner, they can break the lease without penalty. Don't apply any pressure, just give them the option.
    If you present that to the tenants, that at least gets them thinking about their next rental, and they may jump onto an opportunity if a place they like comes up. If I was the tenant, I'd be glad, because now I have 9 months to locate a nice place rather than stressing at the last minute.

    • 1mmy1mmy on 20/09/2018 - 10:39

      Great advice - thank you! We have organised to meet with the property agent (same company and the real estate agent) and we will ask them to pass this on to the tenants. Fingers crossed.

      • altomic on 20/09/2018 - 13:30
        +1

        that was what happened when i bought my first house. tenants were sort of looking to buy. giving them 6 months spurred them on to buy, which they did 8 weeks later. and then we moved into our first house.

        • 1mmy1mmy on 20/09/2018 - 13:36

          That is an excellent outcome!!

    • athk on 21/09/2018 - 17:30

      Please … Please do this!

      Nothing like being told your rental is no longer available and having a short notice period to move out…

      It may be your property, that said, people do get pretty attached to the place they reside in.. Treat them well please..

  • HighAndDry on 20/09/2018 - 10:46
    +1

    1. Yes - in Victoria you need insurance from basically the moment the contract is signed.

    2. Add landlord cover to your insurance, it'll be peanuts extra and provide peace of mind. If it's just an extra 9 months, unless the current managing agents are terrible I'd just keep them on. Don't forget to give notice before the tenancy term is up - even though it's fixed term you still need to give notice to terminate it (either 60 days or 90 days from memory - check the tenancy agreement), and obviously give the tenants a heads up even further in advance.

    3. Victoria should have first home owner grants and benefits, ask your solicitor/conveyancer.

    • 1mmy1mmy on 20/09/2018 - 11:51

      Thank you for all your advice. I'm going to put the notice period in my calendar so we don't miss it - I just looked up the Residential Tenancies Act and if I understood it correctly it is 90 days as the fixed term lease is more than 6 month.

      We paid too much to benefit from the first home owner grants. The homes in that bracket were (in our opinion) not good value after they introduced the stamp duty concessions. But I'm sure others would disagree!

      Cheers!

      • greatlamp on 21/09/2018 - 20:01
        +1

        If you keep the tenants in you aren't eligible for any grants regardless

        • 1mmy1mmy on 21/09/2018 - 20:06

          Interesting info - I didn't know that.

  • Marty-69 on 20/09/2018 - 11:44
    +2

    Skip the building inspection, I had one done in SA (10 years ago) and was complete useless. He didn't check electrical, out of his scope, didn't go on the roof and hardly checked the structure. His list of things he legally couldn't check or was not allowed to check was massive but that might have been changed by now or is different in other states. My sparky checked and fixed electrical and a builder/carpenter checked and fixed the structure.

    • 1mmy1mmy on 20/09/2018 - 11:53

      I heard they can be pretty dodgy. We got an inspection, because we also wanted to know if two structures were load bearing. He climbed in the roof and sent photos. He couldn't report on the sub-floor (termites etc) but rated it low risk. And you're right - nothing about electrical! A bit too late for your excellent advice :)

    • HighAndDry on 20/09/2018 - 12:01
      +1

      Eh. I still recommend a building inspection - it's not expensive (usually only a few hundred dollars) and it can draw your attention to glaring issues with the property. Of course it won't be a comprehensive inspection including structural report, electrical testing, plumbing, etc, but that's because for those you'd be looking at several hundred, if not thousands, per.

      • Marty-69 on 20/09/2018 - 13:08
        +1

        Plumbing, good one! For my next property I'll also add a plumber, they can do a camera inspection.

      • rompastompa on 20/09/2018 - 21:10
        +1

        And, if there's anything dodgy, you've got your way out of the contract allowing you to bargain harder if possible.. :)

    • try2bhelpful on 20/09/2018 - 16:56
      +1

      If you know a tame builder they are probably your best checker for you. The checker we got through, a well known site, missed lots of stuff. When you do come to renovate I would look at posting your job on the Master Builders site.

      • 1mmy1mmy on 20/09/2018 - 22:06

        Never heard of that site - thanks - will look into it. You live up to your name. Many thanks!

  • brownbag on 20/09/2018 - 14:45
    +2

    In relation to the capital gains issue, a good idea is to get a sworn valuation when you do move in as this is a change of use. If property prices haven't risen until then, or your costs are equal to any gain, then you can lock in the zero capital gain, so that if you ever sell it, you won't be liable.

    • 1mmy1mmy on 20/09/2018 - 16:26

      Wow - excellent - I would never have thought of this. I will look into to. Thank you!

    • Quantumcat on 20/09/2018 - 21:25
      +2

      I don't think this will work. It only matters when you buy and sell it. If you rented out for 1/10 of the time you owned it them you'd be paying 1/10 of the capital gains tax. Doesn't matter what a valuer says.

      • SlickMick on 21/09/2018 - 13:29

        Are you sure about that? I got a valuation when the use changed, because I THOUGHT it was obvious that it was based on usage, not prorated??

        • Quantumcat on 21/09/2018 - 14:33

          It couldn't work, otherwise you'd just get it way overvalued to avoid ever paying any capital gains tax.

        • SlickMick on 21/09/2018 - 20:49
          +1

          @Quantumcat:
          You put doubt in my mind, so I spent the afternoon investigating. You can definitely get a valuation when it becomes a rental property and use this as the basis to calculate capital gains.
          https://www.ato.gov.au/forms/guide-to-capital-gains-tax-2017…
          eg examples 69, 71: "treats the dwelling as having been acquired on <dd/mm/yy> at the market value at that time"

        • Quantumcat on 21/09/2018 - 20:58
          +1

          @SlickMick: oh ok, I didn't know this. So it would be easy to avoid capital gains tax by getting it overvalued when you start renting it out.

        • SlickMick on 21/09/2018 - 21:48
          +1

          @Quantumcat:
          You must have better contacts than I do to get it overvalued :)

    • prozerran on 22/09/2018 - 01:01
      +1

      You can only claim capital gains tax exemption if you FIRSTLY live in the property as your PPOR (principle place of residence) and then subsequently use the property to produce income (rent/business).

      OP is rent first prior to PPOR - so the capital gains tax is proportionated.

      Capital gain tax tool:
      https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=CG…

      The below link - again only applies if the purchase was initially used as PPOR
      https://www.ato.gov.au/forms/guide-to-capital-gains-tax-2017…

      • 1mmy1mmy on 22/09/2018 - 04:07

        Thank you for those links!

      • Thenarrator on 22/09/2018 - 08:37

        op rented out first then lived in as ppr after that, will he then get 6y cgt exempt after moving in?

  • onevstheworld on 20/09/2018 - 20:56
    +3

    Does the place need any maintenance work? If it does, ask your accountant if it may be beneficial to get these jobs done while your tenants are in place… you may be able to claim them off your tax. Capital items may also benefit. Definitely can't claim when you start living in it yourself.

    • HighAndDry on 20/09/2018 - 21:12
      +1

      That's actually brilliant. I wonder if there's a timeframe that you have to depreciate it over instead of instantly, so that you can't take advantage of it too much.

      • onevstheworld on 20/09/2018 - 21:18
        +1

        My understanding is maintenance can be claimed in a single tax year, but capital items need to be depreciated. Depreciation is fastest in the first year, so there still is a benefit. I believe the ATO has published standard timeframes for depreciating various items.

        Again, an accountant is the person to ask.

        • 1mmy1mmy on 20/09/2018 - 22:05

          Yes that's what the ATO website says. And there's a difference between repair and improvement which we also need to watch out for.

    • 1mmy1mmy on 20/09/2018 - 22:04

      Yes thanks for the advice. I think we'll look into doing any repairs that can be tax deductable while we're renting out the property.

  • Thazza on 21/09/2018 - 11:41

    Did you move in first prior to renting / do you have another house that you own that is your main residence?

    It would be a good idea to confirm the treatemnet of the CGT if you ever do sell it.

    Better to be aware of it now, rather than waiting for a surprise later.

    • 1mmy1mmy on 21/09/2018 - 16:42

      We don't own any other properties and we haven't lived in this property before. Does that affect CGT? I will investigate. Thank you!

  • field1985 on 21/09/2018 - 11:59

    I wouldn't have bought now.. there has never been a worse time.

    Prices are overvalued by at least 50% when compared to long-term/international trends and current wages.

    Credit is drying up faster then Nana's snatch and interest rates are only going to go up.

    If I were you I would pay down as much of the capital as possible before that happens.

    Because as interest rates rise and wages stay stagnant, people like you who bought at the peak are going to be squeezed hard.

    You will be in debt for more then the property is worth (as house prices slide).

    So even if you back out and sell the house, it wont cover the value of the loan and you will still be in debt.

    Good luck!

    • ldt on 21/09/2018 - 15:26
      +2

      I'll believe that when I see it.

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